Sales panic as stores slash prices

THE pre-Christmas price war is turning into a trading bloodbath as desperate stores slash prices by up to 50%.

Major names including Marks & Spencer, Dixons, Debenhams, W H Smith, Boots, Allders and Habitat are all trying to lure in reluctant customers with dramatic bargains.

DVD players can be bought for less than £20, while hundreds of pounds have been wiped off the price of LCD and plasma screen televisions and digital camcorders.

Fashion chains have heavily marked down coats, woollens, boots and party clothes.

Woolworths will make an aggressive move on Tuesday, cutting prices by up to 30% across many products from DVDs to books, toys and games.

Stores are already resorting to 'guerilla sales' - promotions advertised at the last minute to keep rivals in the dark.

A study from retail analysts Mintel found one in ten people will be spending 'a lot less' on Christmas this year.

Consumer confidence has been hit by five interest rate rises in the past year, coupled with heavy family debt, totalling £1trillion.

Figures to be published by the Bank of England on Monday are expected to confirm the first slowdown in credit card spending this year.

Mintel's Richard Perks said: 'Research points to an increasingly cautious consumer this Christmas. Increased interest rates and the uncertainty of the housing market have undoubtedly taken their toll on spending confidence.

'Many people are now starting to feel the pinch and are less inclined to borrow money.'

In addition, the established high street names are suffering crippling competition from the supermarkets, mainly Tesco and Asda, who have reported a boom in sales of electrical goods, clothing, toys, CDs, DVDs and beauty products.

They are also losing trade because of the increasing numbers of shoppers buying Christmas gifts over the internet.

Retail analyst Nick Bubb, of Evolution Securities, said: 'We are seeing unprecedented levels of special sale days and promotions.

'Unless business picks up, these could become panic sales. If one major chain goes into sale mode, it will have a domino effect across the high street, threatening a bloodbath on prices.

'Canny shoppers can expect to get their Christmas for 25-50% less than the full price.

The City believes the joker in the pack is Marks & Spencer, where new chief executive Stuart Rose is prepared to take aggressive steps to boost Christmas sales.

Mr Bubb said: 'If M&S goes for an all-out attack in terms of sales and promotions, it will have a powerful effect across the high street.

'And Woolworths will be changing its strategy next week, moving from three for the price of two offers to deep cuts in prices.

That will alarm their rivals and trigger a panic response.' Among the deals at Allders, which has a sale day today, are a saving of £700 on a Sharp 26 inch LCD Television, bringing the price down to £1,299. A Kenwood Espresso machine is a third off at £99.

M&S has hundreds of savings on woollens and coats. For example a wool duffle coat is 22% off at £69. In gifts, flute glasses are down by 20% to £4 a piece and a festive teapot is 20% off at £12.

Boots, Superdrug, Marks & Spencer and the Body Shop are halving the price of perfume and beauty gift sets.

Dixons has a basic DVD player for £19.99, while a Packard Bell MP3 Player is half price at £99. W H Smith, Woolworths and HMV have savings on chart CDs and DVD movies.

Furnishing stores, including Habitat, are offering substantial price cuts on sofas, beds and coffee tables, a practice traditionally put off until January.

Woolworths spokesman Nicole Lander said: 'Most people get paid this weekend. We are coming into a crucial trading period.

'We will have new promotions coming into play and there will be special offers on specific products. But because it is a very competitive market out there I am not in a position to disclose the details.'